The Diffusion of Innovation in Low Income Countries

Technological innovation is a key element of industrialisation and catch-up in developing countries. Since innovation is costly, risky and path-dependent, groundbreaking innovation is highly concentrated in a few rich countries and amongst a small number of firms. Foreign sources of technology account for a large part of productivity growth in most countries. If foreign technologies are easy to diffuse and adopt, a technologically backward country can catch up rapidly through the acquisition and more rapid deployment of the most advanced technologies (Eaton and Kortum, 1995; Bell and Pavitt, 1993). Therefore, the development process in low income countries can be supported by tapping existing knowledge and know-how. The transfer, adoption and adaptation of knowledge to low income countries hence constitute an important issue for economic growth and global development.

However, technology diffusion and adoption is neither costless nor unconditional (Keller, 2004). It relies on substantial and well-directed technological efforts (Lall, 1992) as well as sufficient human and financial resources and absorptive capacity (Cohen and Levinthal, 1989). It requires appropriate institutions and policies to incentivise and facilitate the process in addition to strong local capabilities to identify the right technology and appropriate transfer mechanism, and to absorb and make adaptations according to local economic, social, technical and environmental conditions (Fu, et al., 2011). Much of the existing literature focuses on developed countries or developing countries in general. Our understanding of these issues and relationships in the low income countries (LICs) specifically is limited. Defining innovation as a new product or process, or new management, organisational or marketing practices (where 'new' means new to the world or new to the country or the firm) this project aims to fill in the knowledge gap by exploring determinants and transmission channels for effective innovation creation, diffusion and adoption in LICs under institutional, resource and affordability constraints. In particular, it aims to:

-Understand the barriers to innovation creation and diffusion in LICs under institutional, resource and affordability constraints and the space for innovation policy;
-Analyse the determinants of knowledge diffusion in LICs from leading innovators to latecomers, in particular the role of university-industry linkage and inter-firm networks;
-Examine the effect of external knowledge diffusion to LICs, in particular the productivity impact of South-South trade and FDI with a special focus on Chinese trade and FDI in Africa;
-Develop an SME open innovation network model to increase frugal innovation for the poorer societies in LICs.

The research has wide relevance to Development Studies, Technology and Innovation Studies and Globalisation and Area Studies. It will contribute to the literature by filling current gaps in the literature on innovation and relevant industrial, trade, and science and technology policies in LICs. It will be one of the first systematic studies to understand the constraints to innovation creation and diffusion at the firm level in LICs and explore new innovation models and policies to overcome these barriers. The SMEs open innovation network framework will contribute to theory development in Development Studies and Innovation Studies. The project will also produce a bundle of rigorous empirical evidence that fills important gaps in the literature. Findings from the research will have important policy and practical implications for policy makers and practitioners in LICs. The project will also produce a novel survey dataset on innovation diffusion in LICs which will be made available for wider research. The policy reports and best practice guidebooks will be useful to policy makers, business managers and educators and students in LICs.

I. Who will benefit from this research?
In addition to the academic community, findings of this research are of interest to a number of potential non-academic beneficiaries. These include: National policy-makers responsible for technology and industrial policy and development in LICs; International organisations concerned with industrial development, eg., DFID, UNCTAD, UNIDO, World Bank, UNDESA, ADB; NGOs and development-orientated research institutions; Business managers in LICs.
II. How will they benefit from this research?
The project will make its best efforts to address academic, policy, economic and societal impacts through activities involving Communications and Engagement, Collaboration, Exploitation and Application.
1. Communications, Engagement and Collaboration
-The project has developed partnerships with the Science and Technology Policy Research Institute (STEPRI) of the Council for Scientific and Industrial Research (CSIR), Ghana; the African Globelics Doctoral Academy, and leading scholars at the Universities of Cape Town and Tshwane; and has obtained support from policy makers such as the Ministry of Science and Technology of Ghana and UNCTAD. The proposal was co-developed through several rounds of consultation with relevant stakeholders.
-We plan to hold a seminar at an early stage of the project to have another 'reality check'.
-Findings from the research will have important policy and practical implications for LICs. The policy reports and best practice guidebooks will be useful to practitioners and educators. The network analysis is a participatory co-production process. The collaboration with scholars and research institutes in LICs will also significantly enhance our local policy and business linkages.
Exploitation and application
-The dissemination mechanisms include policy meetings and workshops with developing country policy makers & managers, and policy workshops at relevant UN meetings and networks. The PI and the researchers will feed the findings into the policy making process of the stakeholders. The project will organise two Conferences in Oxford and Africa.
-It will also organise a joint workshop with African Globelics Doctoral Academy, disseminating the findings and contribute to capacity building in the younger African generation.
-ODID/QEH and the PI have extensive experience of cooperation with the UNCTAD, UNIDO and various international development initiatives and NGOs, for instance, the Improving Institutions for Growth (IIG) program, the IGC and Oxfam. The PI has already had preliminary discussions with the Director of IIG who expressed strong interest in holding joint outreach workshops in Ethiopia because of real demand in Africa to increase innovation and productivity. The linkage with UNCTAD will strengthen the policy impact and research uptake of the project.
-The project-created survey database and research findings will contribute to an ESRC project online database and DFID Research portal. This new survey database will enable more high quality research on other important issues highlighted in the DFID/ESRC Call, eg, finance and innovation, skills for productivity growth.
-The project will engage graduate students at ODID, eg., the MSc Economics for Development and MPhil Development Studies student will use this database for their thesis research. Small travel funds will be provided to MPhil students who work on topics closely related to the project research.
-The project will also engage more researchers in the Cambridge-Oxford Engineering for Development initiative, and explore out-of-box solutions for the poorer societies.
-A project-based web-site will be developed after the launch of the project. We will publish the practical guidebooks introducing best practices.
-Public media channels will also be used to disseminate the findings of the research. The PI is already an active discussant on major media such as the BBC.